A Tory council is ringing up council house tenants who are in properties considered too large for them to advise them that the coalition government's plans may see them move into smaller accommodation.

The actions of housing officers at Kensington and Chelsea council came to light the day after David Cameron told an audience in Birmingham that there needed to be a rethink of the idea that if someone gets a council house "it is yours for ever". Officers have been warning tenants of the new housing benefit cuts since they were announced in the budget in June.

Downing Street officials briefed that this would mean regular reviews of tenancies to see if the council tenant still needed such a large property, or had sufficient income to shift to the private sector.

One resident cold called this week by council officers was offered an unpalatable choice:either move now with an option of where to live , or eventually be moved with no option.

"The woman on the telephone just said it was because of the new coalition and what the prime minister said," said Carla Farinhas, 58, who lives on her own in a two-bedroom council flat in West London.

A childminder who works 16 hours a week, Farinhas said she is now terrified of losing her flat.

"I could not sleep for the last two nights. I have lived here for 22 years and my husband died 14 years ago. I told them the spare bedroom is very useful as I have grandchildren and I can have them to stay.

"My children gave me £2,000 to paint my flat and put in new carpets because the council would not. So will I lose all this too? I know all the neighbours and my friends. Why make me move? I do not want to go."

The issue of social housing threatens to cause a rift in the coalition government. The Liberal Democrat deputy leader, Simon Hughes, strongly criticised the prime minister's idea, saying his party would need a "lot of persuading" to back it.

The Department for Work and Pensions says that 456,000 households are under-occupying their property, meaning people have more than one spare room.

Despite the Liberal Democrat qualms, the chancellor, George Osborne, has already pencilled in savings in June's emergency budget from the effect of "limiting working-age housing benefit entitlement to reflect the size of the family in the social sector". This translates into an average cut of £1,100 a year in benefit.

Labour MPs said that such draconian measures would need new laws and the council had acted hastily.

"It is profoundly concerning whether through overzealousness or incompetence, the local authority appears to be harassing tenants to give up their homes before legislation has even been passed in parliament," said Karen Buck, an MP in neighbouring Westminster who has campaigned against benefit cuts.

The council would not say how many people it had contacted – only that it was "working with the government to establish accurate figures for under-occupancy". A spokeswoman denied that officials would "force tenants to move".

"The council can only advise tenants on the benefits of downsizing. June's emergency budget announced that from 2013 housing benefit will be restricted to the size of the household and this will have a financial cost for people who are under-occupying properties.

"We believe it is in the tenants' interests to advise them of this proposal."

Kay Boycott, director of policy and campaigns at Shelter, said: "The recent series of disjointed announcements on housing have understandably created confusion and worry."

• This article was amended on 12 August 2010. In the original, a heading and text said that David Cameron's Birmingham announcement had prompted housing officers' cold calls. The original also suggested that a number of residents had received calls this week about the risk of moving later with no option on where to go. This has been corrected. For further details, see this Response column from Wednesday 18 August 2010